Investors and traders may wish to fasten their seat belts. The Australia 200 index is behaving strangely, and the action could foreshadow a big move to come.

The daily chart shows the last nine sessions are largely contained by a 60 point range, between 5,500 and 5,560. Note the Average True Range at the bottom of the chart. It shows volatility has slumped. An ATR close to 90 in late June almost halved to closer to 50 points per day now. This narrow range may indicate a wrestle between bulls and bears, with supply and demand closely matched. For now.

This phenomen is not confined to Australia. The US SPX 500 index has now traded 23 days in a row without making any daily change greater than 1%. Yet global risks remain high, as does global money supply and the super low interest rate environment. Shockingly, the UK 100 index is now around 6% above the levels trading before the Brexit vote, although no doubt aided by a lower British Pound.

This sort of range will not last forever, and the build up of energy as it trades this narrow range could see it move explosively once the range is breached. The build up is not indicating a direction, nor can we say with certainty what event could trigger a move. A "taper tantrum" style sell off after a surprise rate hike by the fed in September is a possibility. A surprise rate cut by the RBA could bring a melt up. Of course, there are many other possible scheduled and unscheduled events that could break the index out of its range.

Whichever way it goes, it's a good time to pay close attention to market action.